Chinese pension fund investment in the stock market made a profit of 8.783 billion yuan (US$1.26 billion) in 2017, yielding a return of 5.23 percent, according to the annual report of the National Council for Social Security Fund released on Monday.
By the end of 2017, the council had signed entrusted contracts on investment for China's basic pension fund with nine provincial regions, namely Guangxi, Beijing, Henan, Yunnan, Hubei, Shanghai, Shaanxi, Anhui and Shanxi, with a total value of 430 billion yuan and a term of entrustment of five years, according to the report.
The State Council published the final guidelines on investment for China's massive pension fund in August 2015, effectively opening the gate for stock market investment.
The final guideline allows pension funds to be invested in new products, including domestic stock markets, but restricts the maximum proportion of investments in stocks and equities to 30 percent of total net assets.
The government's approach was intended to create more value for the pension fund, which was previously deposited in banks or invested in treasury bonds with low yields, a condition that had long spurred calls for change amid the huge challenge of caring for its increasing elderly population.
The report's release was timely, as three years have passed since the State Council's guideline was published and there was much public discussion as to whether investing pension money in the stock market was a profitable business or not.
In addition to the profit figure, the report shows that, at the end of 2017, China's total assets of basic pension funds stood at 315.52 billion yuan, among which 93.47 billion yuan involved direct investment assets (29.62% of total assets), and 222.05 billion yuan were entrusted investment assets (70.38%).